Must still have assent, benefit and control and be working within scope of authority.

When is there vicarious liability for the torts of an independent contractor?

Generally, there is no vicarious liability as do not have supervisory authority over manner of performance. Two EXCEPTIONS:
1. If IC engaged in ultrahazardous activity and commits tort (ex. break repair)
2. Estoppel - held out with appearance of agency

How do we Determine the Scope of the Agent's Authority?

Three-part test:
1. was conduct of type agent hired to perform?
2. did tort occur on the job (frolic v. detour)
3. Did agent intend to benefit the principal?

When are intentional torts of an agent within the scope of employment?

IF:
1. specifically authorized by principal; or
2. natural from the nature of employment; or
3. motivated by a desire to serve the principal.

Principal used words (oral or written unless Statute of Frauds would apply to contract, in which case authorization must also be written)
2. Revocable at unilateral act of either party or death/incapacity of principal (unless agent has durable power of attny)

What is actual implied authority?

authority agent reasonably believes principal has given because of necessity or custom or prior dealings

What is apparent authority?

1. Principal cloaked agent with appearance of authority PLUS
2. Third party reasonably relies on appearance of authority

Ratification

Principal has knowledge of material facts AND accepts benefits of the contract

When may an authorized agent be liable on a contract?

Generally, if agent had authority, is not liable. BUT, if principal was partially or fully undisclosed, authorized agent may be personally liable at the election of the third party.

No formal ones; look at conduct alone.
1. Sharing of profits is prima facie evidence of a partnership.

What is the definition of a partnership?

an association of two or more persons carried on as co-owners of a business for profit.

What are the applicable agency principals to partners?

1. bound as agents of partnership
2. bound by torts committed by partners acting within scope of authority
3. bound by contracts entered into by partners with authority

What are the characteristics of general partners?

1. personally liable for the debts of the partnership
a. liability remains until death UNLESS notice of withdrawal provided to ALL potential creditors
2.

How do you form a Limited Partnership?

1. file certificate of partnership with Dept. of State including names of all general partners

Characteristics of a Limited Partnership

1. at least one general member and one limited member.
2. limited members not personally liable for debts of partnership, but CANNOT exercise managerial control

What are the characteristics of a registered limited liability partnership?

1. general partnership engaged in professional services
2.no partner is personally liable for debts of business form, but each remains liable for his own wrongdoing and for the wrongdoing of those under supervision

How do you form a Registered Limited Liability Partnership?

register certificate of registration with department of state to perform professional services

What are the characteristics of a Limited Liability Company?

1. get similar liability to corporation, but with tax benefits of partnership
2. Members, who are owners, are not personally liable for company's debts
3. Members control, but may delegate to Managers
4. Limited Liquidity of membership interests
5. Limited Life

How do you form a Limited Liability Company?

1. file articles of organization with Dept. of State
2. public summaries of the articles once a week for 6 weeks in a row in 2 newspapers

Duties Owed by Partners in Partnership

1. no self dealing
2. no secret profits
3. no usurping of opportunity
4. duty of care and loyalty

If there is a conflict as to whether something is a partnership asset or personal asset, what should you look at?

whose money was used to buy the property?

How is a partnership managed?

Absent agreement, each partner entitled to equal control.

Do partners get a salary?

Absent agreement, no, except for helping to wind up after dissolution.

What is the basic rule for partner's share of profits?

absent agreement, share in profits equally

What is rule for partner's losses absent agreement?

Share in the same way as profits.

What constitutes dissolution?

any material change in the partnership, caused by death or withdrawal of a partner

What is termination?

the real end of a partnership

What is winding up?

period between dissolution and termination in which partners help liquidate assets to satisfy creditors

Do partners receive compensation for winding up?

yes

Partnership's Liability for Winding up

1. If Old Business: partnership, and thus all individual partners, liable on all transactions to wind up old business
2. Retain liabiliy on new transactions UNTIL notice of dissolution given to all known and potential creditors

What is the priority of distribution at wind up?

1. creditors must be paid first.
a. outside non-partner creditors
b. insiders who have loaned money to partnership
2. capital contributions by partners must be paid (must make full restitution so individual partners may be liable on this)
3. profits and surplus if any share equally
4. remaining losses shared equally.

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